(Correct headline to read "burden sharing" instead of "bail
ROME Dec 12 Italy prefers a market solution to
save Monte dei Paschi di Siena, but should it fail a
state rescue would require a forced conversion of the bank's
bonds into shares, Treasury sources said on Monday.
Italy indicated last week it was ready to pass an emergency
decree if the banking system needed support, but the lender,
Italy's third-biggest, said on Sunday it would make a last-ditch
push to raise 5 billion euros ($5.30 billion) privately.
Any state intervention would require the approval of the
European Commission and would have to be done according to
European rules, which would involve a conversion of the bank's
bonds into shares, sources said.
The state could still compensate retail bondholders who lose
money, but the details would have to be negotiated with
Brussels, sources said.
($1 = 0.9442 euros)
(Reporting by Giuseppe Fonte, writing by Steve Scherer; editing
by John Stonestreet)